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Are cryptocurrencies set to take over the world?

By: Tony Keating

Date: 15 October 2018

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Cryptocurrencies are at a crucial juncture in their development, with many businesses rejecting their use in favour of more traditional, less volatile currencies. Yet those who support them do so passionately, believing that the advantages make them impossible to ignore.

While many companies and governments reject the benefits of cryptos, their capacity to suddenly explode in popularity makes it imperative for businesses to monitor their development. Supporters of cryptocurrencies believe that the lack of restrictions imposed on crypto transactions makes their mass adoption a certainty.

For cryptocurrencies to make the transition from unknown quantity to default currency, though, the endorsement of governments will be required. Most have been reticent to embrace cryptocurrencies - as, because crypto transactions operate outside of regulation or restriction, it reduces the influence of administrations.

The UK government have called for more regulation on cryptocurrencies, highlighting its sceptical perception of cryptos. More regulation would undermine one of the main strengths of cryptocurrency, so it is hardly a ringing endorsement of cryptos as the future of money.

Looking to the leading companies

For businesses, it may be more instructive to look at the stance of the world's leading companies. Companies don't get too much bigger than Google, with the tech giant recently reversing its ban on cryptocurrency-related advertising. The walk back of the ban is not wholesale, but Google will permit regulated crypto exchanges to purchase advertising in the US and Japan.

This is more significant symbolically than it is legislatively. The initial ban reflects worries over the lack of regulation of cryptocurrency, but its partial reversal highlights an acceptance of its popularity.

The biggest concern facing smaller businesses will be whether they can capitalise on that growth by getting ahead of the curve. That growth may not be inevitable, however. Many companies have reneged their acceptance of Bitcoin payments - travel booking platform Expediaremoved the option in June 2018 after four years; gaming giant Steam has also declined cryptos.

The scarcity of businesses and traders that accept cryptos is making many consumers consider the worth of renouncing traditional currencies. For example, the proportion of forex brokers using cryptos remains small. The USP of a cryptocurrency is the ability to facilitate transactions that exist beyond tariffs and restrictions of third parties, but most forex brokers are still electing to remain with tried and trusted methods.

Even if businesses and brokers do welcome Bitcoin payments, there is no guarantee that profits will follow. A recent report from Mashable considers how many companies have removed the option for Bitcoin payments, and those that have retained it find that it's being used infrequently. Those that retain it do so in the hope that cryptocurrency will eventually become more widely accepted and used - but these hopes are more speculative than grounded in statistics.

Cryptos to take hold in ecommerce?

With many companies choosing to remove Bitcoin payments, the trend of cryptocurrency seems to be heading in the opposite direction. This decline is not irreversible; if a giant like Amazon throws their weight behind it, the markets will react accordingly.

Cryptocurrency may have its greatest success in the world of ecommerce. Cryptocurrency allows transactions to be made more quickly and cheaply. By bypassing third parties and removing transaction fees, cryptocurrencies create a smoother process. This may entice leading ecommerce companies to advocate the adoption of cryptos.

The basic technology behind cryptocurrency may also prove influential beyond the scope of Bitcoin. The encryption technology of cryptocurrency, through its popularisation of asymmetric key encryption, could be significant in reshaping the future of digital security.

For now, it's wise for businesses to remain cautious about adopting cryptocurrencies. Cryptos are at a pivotal moment in their development. While the unrestricted nature of transactions makes them appealing, cryptocurrencies are limited if most companies and consumers reject their validity.

If options for Bitcoin payments continue to be withdrawn, its popularity will fade. If governments and leading companies approve its adoption, then it may well achieve the mass adoption that its fans long for. Until then, its volatility makes it safer to watch from a distance.

Copyright 2018. Article was made possible by site supporter Tony Keating, freelance writer

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